UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this [ ] day of [ ], 2000, by and between
Farm Bureau Life Insurance Company ("Farm Bureau"), an Iowa corporation, on its
own behalf and on behalf of Farm Bureau Life Annuity Account ("Annuity Account")
and EquiTrust Marketing Services, LLC ("EquiTrust Marketing"), a Delaware
limited liability company.
WITNESSETH
WHEREAS, Farm Bureau has established and maintains the Annuity Account,
a segregated investment account, pursuant to the laws of the State of Iowa for
the purpose of selling flexible premium deferred variable annuity contracts (the
"Contracts"), to commence after the effectiveness of the registration statement
for the Contracts as filed with Securities and Exchange Commission (the "SEC")
on Form N-4 pursuant to the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Annuity Account is registered as a unit investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act:"); and
WHEREAS, EquiTrust Marketing is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the parties desire to have EquiTrust Marketing act as
principal underwriter for the Account and assume such supervisory responsibility
as is required by federal and state securities law and applicable requirements
of the NASD for the securities activities of any "person associated" (as that
term is defined in Section 3(a)(18) of the 0000 Xxx) with EquiTrust Marketing,
including Farm Bureau personnel, and engaged directly or indirectly in Farm
Bureau's variable annuity operations (the "associated persons"); and
WHEREAS, Farm Bureau and the Annuity Account desire to have the
Contracts sold and distributed through EquiTrust Marketing, and EquiTrust
Marketing is willing to sell and distribute such Contracts, under the terms
stated herein.
NOW THEREFORE, the parties hereto agree as follows:
1. DISTRIBUTOR AND PRINCIPAL UNDERWRITER
Farm Bureau grants to EquiTrust Marketing the right to be, and EquiTrust
Marketing agrees to serve as, distributor and principal underwriter of the
Contracts during the term of this Agreement. EquiTrust Marketing agrees to use
its best efforts to solicit applications for the Contracts, and to undertake to
provide sales services relative to the Contracts and otherwise to
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perform all duties and functions which are necessary and proper for the
distribution of the Contracts.
2. PREMIUM PAYMENTS
All premium payments or other monies payable for the Contracts shall be paid or
remitted in full by or on behalf of contract owners directly to Farm Bureau or
its designated servicing agent together with such applications, forms and other
documentation as may be required by Farm Bureau. Checks or money orders in
payment of premiums or other monies payable shall be drawn to the order of "Farm
Bureau Life Insurance Company." Farm Bureau will retain all such payments except
to the extent such payments are allocated to the Annuity Account.
3. SALES IN ACCORDANCE WITH CURRENT PROSPECTUS
EquiTrust Marketing agrees to offer the Contracts for sale in accordance with
the current prospectus therefor. EquiTrust Marketing is not authorized to give
any information or to make any representations concerning the Contracts other
than those contained in the current prospectus therefor filed with the SEC or in
such sales literature as may be developed and authorized by Farm Bureau.
4. PROSPECTUSES AND PROMOTIONAL MATERIALS
On behalf of the Annuity Account, Farm Bureau shall furnish EquiTrust Marketing
with copies of all prospectuses, financial statements, and other documents which
EquiTrust Marketing reasonably requests for use in connection with the
distribution of the Contracts. Farm Bureau shall have responsibility for
preparing, filing and printing all required prospectuses and/or registration
statements in connection with the Contracts and the payment of all related
expenses. EquiTrust Marketing and Farm Bureau shall cooperate fully in the
design, draft, and review of sales promotion materials and the preparation of
individual sales proposals related to the sale of the Contracts. EquiTrust
Marketing shall not use any such materials not provided or approved by Farm
Bureau.
5. COMPLIANCE WITH APPLICABLE LAWS
EquiTrust Marketing represents that it is duly registered as a broker-dealer
under the 1934 Act and is a member in good standing of the NASD and, to the
extent necessary to offer the Contracts, shall be duly registered or otherwise
qualified under the securities laws of any state or other jurisdiction.
EquiTrust Marketing shall be responsible for carrying out its sales and
underwriting obligation hereunder in continued compliance with the NASD Rules of
Fair Practice and federal and state securities laws and regulations. Without
limiting the generality of the foregoing, EquiTrust Marketing agrees that it
shall be fully responsible for:
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(a) ensuring that no person shall offer or sell the Contracts on its behalf
until such person is duly registered as a representative of EquiTrust
Marketing, duly licensed and appointed by Farm Bureau under applicable
state insurance law, and appropriately licensed, registered or
otherwise qualified to offer and sell such Contracts under the federal
securities laws and any applicable securities laws of each state or
other jurisdiction in which such Contracts may be lawfully sold, in
which Farm Bureau is licensed to sell the Contracts and in which such
persons shall offer or sell the Contracts; and
(b) training, supervision, and control of all such persons for purposes of
complying on a continuous basis with the NASD Rules of Fair Practice
and with federal and state securities laws requirements applicable in
connection with the offering and sale of the Contracts. In this
connection EquiTrust Marketing shall:
(i) conduct such training (including the preparation and
utilization of training materials) as in the opinion of
EquiTrust Marketing is necessary to accomplish the purposes of
this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of associated persons or
brokers selling the Contracts;
(iii) establish branch offices and offices of supervisory
jurisdiction, as necessary or appropriate; and
(iv) take reasonable steps to ensure that the various sales
representatives associated with it shall not make
recommendations to an applicant to purchase a Contract in
the absence of reasonable grounds to believe that the purchase
of the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall
be based on information furnished to a sales representative
after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives, financial
situation and needs, and the likelihood of whether the
applicant will persist with the Contract for such a period
of time that Farm Bureau's acquisition costs are amortized
over a reasonable period of time.
6. SALES AGREEMENTS
EquiTrust Marketing is hereby authorized to enter into separate written
agreements, on such terms and conditions as EquiTrust Marketing may determine
not inconsistent with this Agreement, with broker-dealers which agree to
participate in the distribution of the Contracts and to use their best
efforts to solicit applications for the Contracts. All such sales agreements
shall provide that each independent broker-dealer will assume full
responsibility for continued compliance by itself and its representatives
with applicable federal and state securities laws. Such broker-dealers and
their agents or representatives soliciting applications for the Contracts
shall be duly and appropriately licensed, registered or otherwise qualified
for the sale of such Contracts under the federal securities laws, the state
insurance laws and any applicable state
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securities laws of each state or other jurisdiction in which such Contracts
may be lawfully sold and in which Farm Bureau is licensed to sell the
Contracts.
Each such organization shall be both registered as a broker-dealer under the
1934 Act and a member of the NASD.
Applications for the Contracts solicited by such organizations through their
representatives shall be forwarded to Farm Bureau. All payments for the
Contracts shall be made by check payable to "Farm Bureau Life Insurance Company"
and remitted promptly by such organizations to Farm Bureau as agent for
EquiTrust Marketing. All broker-dealers who agree to participate in the
distribution of the Contracts shall act as independent contractors and nothing
herein contained shall constitute such broker-dealers or their agents or
employees as employees of Farm Bureau in connection with the sale of the
Contracts.
7. INSURANCE LICENSES
Farm Bureau shall apply for the proper insurance licenses in the appropriate
states or jurisdictions for the designated persons associated with EquiTrust
Marketing or with other independent broker-dealers which have entered into
agreements with EquiTrust Marketing for the sale of the Contracts, provided that
Farm Bureau reserves the right to refuse to appoint any proposed registered
representatives as an agent or broker, and to terminate an agent or broker once
appointed.
8. MAINTENANCE OF BOOKS, RECORDS AND ACCOUNTS
Farm Bureau and EquiTrust Marketing shall cause to be maintained and preserved,
for the periods prescribed, such accounts, books and other documents as are
required of them by the 1940 Act, the 1934 Act and any other applicable laws and
regulations. The books, accounts and records of Farm Bureau, the Annuity
Account, and EquiTrust Marketing as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature and details of
the transactions.
As agent for and on behalf of EquiTrust Marketing, Farm Bureau shall maintain
such books and records of EquiTrust Marketing pertaining to the sale of the
Contracts and required by the 1934 Act as may be mutually agreed upon from time
to time by Farm Bureau and EquiTrust Marketing; provided that such books and
records shall be the property of EquiTrust Marketing and shall at all times be
subject to such reasonable periodic, special or other examination by the SEC and
all other regulatory bodies having jurisdiction. In addition, Farm Bureau will
maintain records of all sales commissions paid to associated persons of
EquiTrust Marketing in connection with the sale of the Contracts. Farm Bureau,
as agent for EquiTrust Marketing, shall be responsible for sending all required
confirmations on customer transactions in compliance with applicable
regulations, as modified by an exemption or other relief obtained by Farm Bureau
and EquiTrust Marketing.
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EquiTrust Marketing shall have the responsibility for maintaining the records of
associated persons of EquiTrust Marketing who are licensed, registered, and
otherwise qualified to sell the Contracts, and for furnishing periodic reports
thereto to Farm Bureau. EquiTrust Marketing shall cause Farm Bureau to be
furnished with such other reports as Farm Bureau may reasonably request for the
purpose of meeting its reporting and recordkeeping requirements under the
insurance laws of the State of Iowa and any other applicable states or
jurisdictions.
9. COSTS AND EXPENSES BORNE BY EQUITRUST MARKETING
EquiTrust Marketing shall bear the costs and expenses of: (a) services,
materials, and supplies required to be supplied by EquiTrust Marketing pursuant
to the terms of this Agreement; (b) registration, licensing or other
qualification of associated persons of EquiTrust Marketing under federal and
state securities laws and with the NASD; and (c) training and supervision of
associated persons.
10. COMPENSATION FOR EQUITRUST MARKETING'S SERVICES
As compensation for EquiTrust Marketing's assumption of the costs and expenses
set forth in Section 9 hereof, the sales services rendered by EquiTrust
Marketing and the associated persons of EquiTrust Marketing, and the continuing
obligations herein, Farm Bureau shall pay: (a) an annual fee, payable monthly,
at a rate equal to $100 multiplied by the number of associated persons of
EquiTrust Marketing; (b) all commissions or other fees or amounts which are due
or otherwise payable to associated persons of EquiTrust Marketing in accordance
with the compensation schedules attached to the associated persons agreements
for the sale of the Contracts as may be revised from time to time by EquiTrust
Marketing; and (c) such compensation as is due under dealer sales agreements
that EquiTrust Marketing and Farm Bureau enter into with other broker-dealers
pursuant to Section 6 hereof.
11. PAYMASTER ARRANGEMENT
In accordance with the terms of the Letter of Instruction dated the same date as
this Agreement and attached hereto as Exhibit A, as it may be amended from time
to time, from EquiTrust Marketing to Farm Bureau, Farm Bureau will pay
commissions payable to designated associated persons of EquiTrust Marketing as
paying agent on behalf of EquiTrust Marketing and will maintain the books and
records reflecting such payments in accordance with the requirements of the 1934
Act on behalf of EquiTrust Marketing. Farm Bureau acknowledges and agrees that
its services in this regard are purely ministerial and clerical in nature and
shall not interfere with the control and supervision exercised by EquiTrust
Marketing over its associated persons with regard to the Contracts. Farm Bureau
further acknowledges and agrees that EquiTrust Marketing shall not be liable to
any party for commissions payable hereunder. Farm Bureau may delegate its
responsibility to pay compensation or commissions pursuant to this Section 11 to
any other
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insurer affiliated with Farm Bureau, in its discretion, provided such insurer
agrees to comply with the provisions hereof applicable to the payment of such
compensation or commissions. Farm Bureau shall have no right to compensation
for the performance of any activities pursuant to this Section 11. Associated
persons of EquiTrust Marketing shall have no interest in this Agreement or
right to any compensation to be paid by or on behalf of EquiTrust Marketing
hereunder prior to their receipt thereof.
12. INDEMNIFICATION
Farm Bureau agrees to indemnify EquiTrust Marketing for any losses incurred as a
result of any action taken or omitted by EquiTrust Marketing or any of its
officers, agents, or employees in performing their responsibilities under this
Agreement in good faith and without willful misfeasance, gross negligence, or
reckless disregard of such obligations.
13. INVESTIGATIONS AND PROCEEDINGS
EquiTrust Marketing and Farm Bureau agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts distributed under this Agreement. EquiTrust
Marketing and Farm Bureau further agree to cooperate fully in any securities
regulatory inspection, inquiry, investigation or proceeding or any judicial
proceeding with respect to Farm Bureau, EquiTrust Marketing, their affiliates,
or the associated persons to the extent that such inspection, inquiry,
investigation or proceeding is in connection with the Contracts distributed
under this Agreement. Without limiting the foregoing:
(a) EquiTrust Marketing will be notified promptly of any customer
complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding or judicial proceeding received by
Farm Bureau with respect to EquiTrust Marketing or any
associated person or which may affect Farm Bureau's issuance
of any Contract marketed under this Agreement; and
(b) EquiTrust Marketing will promptly notify Farm Bureau of any
customer complaint or notice of any regulatory inspection,
inquiry, investigation or proceeding received by EquiTrust
Marketing or its affiliates with respect to EquiTrust
Marketing or any associated person in connection with any
Contract distributed under this Agreement or any activity in
connection with any such Contract. In the case of a customer
complaint, EquiTrust Marketing and Farm Bureau will cooperate
in investigating such complaint and arrive at a mutually
satisfactory response.
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14. TERMINATION
This Agreement may be terminated by either party hereto upon 60 days' written
notice to the other party without the payment of any penalty. This Agreement may
be terminated upon written notice of one party to the other party hereto in the
event of bankruptcy or insolvency of such party to which notice is given. This
Agreement may be terminated at any time upon the mutual written consent of the
parties hereto. This Agreement shall terminate automatically if it shall be
assigned.
Upon termination of this Agreement, all authorizations, rights and obligations
hereunder shall cease except (a) the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at the time of termination or issued pursuant to applications received by Farm
Bureau prior to termination, and (b) the agreements contained in 12 hereof.
15. EXCLUSIVITY
The services of EquiTrust Marketing hereunder are not to be deemed exclusive and
EquiTrust Marketing shall be free to render similar services to others so long
as its services hereunder are not impaired or interfered with hereby.
16. REGULATION
This Agreement shall be subject to the provisions of the 1940 Act and the 1934
Act and the rules, regulations, and rulings thereunder and of the NASD, from
time to time in effect, including such exemptions from the 1940 Act as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
EquiTrust Marketing shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of Farm Bureau or the Annuity Account,
present or future, and will provide any information, reports or other material
which any such body by reason of this Agreement may request or require pursuant
to applicable laws or regulations. Without limiting the generality of the
foregoing, EquiTrust Marketing shall furnish the Iowa Department of Insurance
with any information or reports which the Department may request in order to
ascertain whether the variable annuity operations of Farm Bureau are being
conducted in a manner consistent with the Department's variable annuity
insurance regulations and any other applicable law or regulations.
17. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby.
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18. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and governed
by the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the day and year
first above written.
Attest:
FARM BUREAU LIFE INSURANCE COMPANY
Xxxxxxx X. Xxxx,
Chief Executive Officer
Attest:
EQUITRUST MARKETING SERVICES, LLC
Xxxxxx X. Xxxxxx,
Vice President - Investment Administration
EXHIBIT A
[EquiTrust Marketing Services, LLC Letterhead]
[Letter of Instruction from EquiTrust Marketing to Farm Bureau]
Farm Bureau Insurance Company
To Whom it May Concern:
With reference to the agreement (the "Agreement") between you and the
undersigned regarding the payment of commissions for securities transactions to
our associated persons ("Reps"), you are hereby directed to follow these
instructions:
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- You shall pay commissions to Reps for the sale of securities
effected on behalf of EquiTrust Marketing in accordance with
the compensation schedules attached as Attachment A hereto.
- You will be furnished information regarding compensation
payable to each Rep for each processing period through [ ],
which information may include instructions with regard to the
payment of advances on commissions payable.
- Funds will be transferred to you by [describe monetary
transfer procedures].
- Payments made to Reps may be aggregated with other
compensation payable for other products and services for
which you act as payor.
- You must furnish a statement to each Rep detailing the
compensation paid on behalf of EquiTrust Marketing and
indicating that such portion is paid on behalf of EquiTrust
Marketing.
- You may make deductions from commissions that have been
authorized by EquiTrust Marketing or by the Rep.
- [In the case of a Rep who is your common law employee, you are
authorized to include securities compensation in the base of
compensation payable to the Rep, and to make deductions for
fringe benefits from such base so long there is no
differential in the proportionate amount of securities
compensation earned by the Rep that is allocated to fringe
benefits as compared with the amount of non-securities
compensation earned by the Rep that is allocated to the same
fringe benefits.]
- You are authorized to make any deductions from compensation
payable to a Rep for wage garnishments ordered by a court of
competent jurisdiction against such Rep.
- You will furnish us on a monthly basis with a report
concerning compensation paid by you during the month pursuant
to the Agreement.
[Signed: EquiTrust Marketing Services, LCC]
Attachment
ATTACHMENT A
EQUITRUST MARKETING COMPENSATION SCHEDULE
[TO BE ATTACHED TO LETTER FROM EQUITRUST MARKETING TO FARM BUREAU]
